Bombardier Inc. Stock: Debt is Too Much to Overlook You might think Bombardier can just use their available short-term capital resources (Cash and revolver) of $3.9B to pay off a portion of this debt, but this money will be needed to pay off short-term obligations due to their poor liquidity and inventory turnover. Bombardier may have to halt CapEx spending, which will deteriorate the value of their assets and stop any growth initiates in their pipeline, thus limiting their ability to generate cash flows.
The Company’s FCF guidance seems aggressive given their history of poor budget projections and missing project deadlines. So, what we are left with is a mismanaged company that will have issues paying off debt, if it does pay off its debt it will be left with a depleted asset base.
Bombardier is trading at 18.2x EBITDA compared to the Aerospace & Defense industry median of 11.3x, suggesting investors are optimistic about the Company’s future EBITDA growth. This valuation seems high for a Company that will likely have trouble paying off its debt.
Reference :
https://smallcappower.com/analyst-articles/bombardier-inc-stock-debt/